supply chain vulnerabilities & national security risks across the us defense industrial base

355 Pages·2013·10.03 MB·English

May 2013
REMAKING
AMERICAN
SECURITY
SUPPLY CHAIN VULNERABILITIES &
NATIONAL SECURITY RISKS ACROSS
THE U.S. DEFENSE INDUSTRIAL BASE
BRIGADIER GENERAL JOHN ADAMS, U.S. ARMY (RETIRED)
A Report Prepared for AAM by
REMAKING
AMERICAN
SECURITY
SUPPLY CHAIN VULNERABILITIES &
NATIONAL SECURITY RISKS ACROSS
THE U.S. DEFENSE INDUSTRIAL BASE
BRIGADIER GENERAL JOHN ADAMS, U.S. ARMY (RETIRED)
A Report Prepared for AAM by
Contributing Authors:
Paulette Kurzer, Ph.D. (Senior Vice President of Guardian Six Consulting LLC) • Amber Allen
Colonel Peter Aubrey, U.S. Army (Retired) • Eric Auner • Ryan G. Baird, Ph.D. • Chris Beecroft
Nathan Donohue • Keith A. Grant, Ph.D. • Ari Kattan • Janne E. Nolan, Ph.D.
Copyright © 2013 by the Alliance for American Manufacturing.
All rights reserved. Except for brief quotations in a review, this book, or parts thereof,
must not be reproduced in any form without permission in writing from the publisher.
For information, address:
Alliance for American Manufacturing
711 D Street NW, 3rd flr
Washington, D.C. 20004
202-393-3430
americanmanufacturing.org
First published May 2013 by the Alliance for American Manufacturing
ISBN 978-0-9892574-0-4 (paperback)
Printed in the United States of America.
April 15, 2013
Tucson, Arizona
As a 30-year veteran of the U.S. Army, I know that our national survival depends
upon the readiness and skill of our armed forces. Our soldiers, sailors, airmen, and
Marines stand guard around the world in defense of our nation and our Constitution.
Yet all too often, we take for granted that our warriors will always have the equip-
ment they need to win. All too often, we take for granted those who build the equip-
ment that our warriors depend upon to perform their vital duties.
And all too often, we fail to recognize that weapons that can’t be built can’t be fired.
Our defense industrial base workers also stand guard—on our shop floors and in
our factories, our chip foundries, and our shipyards. They ensure that our warriors
have the world-class weapons and equipment they need to win on the battlefield.
They, too, guard our nation.
When I began this report in mid-2011, I knew that some of the results of our investi-
gation would be disturbing. The current level of risk to our defense supply chains and
to our advanced technological capacity is not a good news story, to say the least.
However, what I have learned has inspired rather than discouraged me. First, I con-
firmed that the men and women who keep our defense industrial base running—at all
levels—are dedicated, competent, patriotic, and genuinely determined to ensure the
United States’ survival in a complex and often dangerous world. Second, I’ve come
to understand that the United States has realistic options for preserving our defense
industrial base—a vital national asset. Third, I have had the privilege of meeting many
of those who work to sustain our defense industrial base and have heard how they too
are concerned about its vitality. They have invested their professional and personal
lives in their work for the sake of our great nation.
Of course, it should come as no surprise that we have such committed and capa-
ble people in our defense industrial base. They are, after all, Americans—the most
ingenious, hard-working people on the planet. For this reason alone, I am confident
in our efforts to preserve, strengthen, and—as necessary—revive our defense indus-
trial base.
Working together, we will succeed. But we must not delay.
Respectfully,
John Adams
Brigadier General, U.S. Army (Retired)
President, Guardian Six Consulting LLC
ABOUT THE AUTHOR
Brigadier General John Adams, U.S. Army (Retired), is President of Guardian Six Consulting
LLC. General Adams served his final military assignment as Deputy U.S. Military Representative to the
NATO Military Committee in Brussels, Belgium. He retired from the U.S. Army in September 2007.
On September 11, 2001, General Adams was stationed at the Pentagon as Deputy Director for
European Policy in the Office of the Secretary of Defense (OSD). He participated in immediate disaster
recovery operations at ground zero and coordinated international support for the U.S. diplomatic and
military response.
He is a veteran of Operation Desert Storm (1991) and Operation Guardian Assistance in Rwanda (1996).
During more than 30 years of service in command and staff assignments, he spent nearly 18 years in
Europe, Asia, the Middle East, and Africa, including assignments with U.S. Embassies in Belgium (1994-
1997), Rwanda (1996), Croatia (1998-2001), and South Korea (2002-2003). As an Army Aviator, General
Adams has more than 700 hours as pilot-in-command in fixed- and rotary-wing aircraft.
General Adams’ military awards and decorations include the Defense Superior Service Medal (with
Oak Leaf Cluster), the Bronze Star Medal, the Army Aviator Badge, Parachute Badge, and Ranger
Tab. He is a recipient of the Military Intelligence Corps Association’s Knowlton Award and the Director
of Central Intelligence’s Exceptional Collector National HUMINT Award for excellence in gathering
human intelligence.
Born and raised in the Washington, D.C., area, General Adams is a Ph.D. candidate in Political
Science at the University of Arizona and holds Masters Degrees in International Relations (Boston
University), English (University of Massachusetts), and Strategic Studies (US Army War College).
ABOUT AAM
The Alliance for American Manufacturing (AAM) is a nonprofit, non-partisan partnership formed
in 2007 by some of the United States’ leading manufacturers and the United Steelworkers to explore
common solutions to challenging public policy topics such as job creation, infrastructure investment,
international trade, and global competitiveness.
We believe that an innovative and growing manufacturing base is vital to the United States’ economic
and national security, as well as to providing good jobs for future generations. AAM achieves its mis-
sion through research, public education, advocacy, strategic communications, and coalition-building
around the issues that matter most to the U.S. manufacturing sector.
AAM’s capacity includes a Washington D.C.-based lobby and research operation and a national field
staff. Current platforms include promoting strong Buy American provisions at both the federal and
state levels, advocating for fair trade, and promoting revitalization through a long-term national manu-
facturing strategy.
The blueprint for the future was built by AAM.
ABOUT GUARDIAN SIX
Guardian Six Consulting is a defense and national security consulting firm that advises govern-
ments, businesses, and nonprofits. Our experts have decades of practical, military, and academic
experience in national security, defense policy, intelligence, international relations, and economic
analysis.
We provide in-depth policy research, rigorous analysis, and innovative strategic advice on national
security issues, bringing our expertise to bear on sensitive issues that demand the utmost pragmatism
and insight. We distill complex issues and deliver usable products to our clients. Guardian Six is ideally
suited to help companies with defense-related products and services compete in the growing global
defense and national security marketplace. We address problems such as defense critical require-
ments, strategic threats, defense industrial policy, arms control, non-proliferation, terrorism, and new
security threats.
CONTENTS e
TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................................................................................i
SCOPE AND METHODOLOGY ............................................................................................................................ix
CHAPTER 1: INTRODUCTION .............................................................................................................................1
COMMODITIES AND RAW MATERIALS
CHAPTER 2: STEEL ARMOR PLATE ..................................................................................................................21
CHAPTER 3: SPECIALTY METALS ....................................................................................................................41
CHAPTER 4: TITANIUM ....................................................................................................................................81
CHAPTER 5: HIGH-TECH MAGNETS ..............................................................................................................105
SUBCOMPONENTS
CHAPTER 6: FASTENERS ..............................................................................................................................129
CHAPTER 7: SEMICONDUCTORS ..................................................................................................................151
CHAPTER 8: COPPER-NICKEL TUBING .......................................................................................................................179
CHAPTER 9: LITHIUM-ION BATTERIES .......................................................................................................................191
CHAPTER 10: HELLFIRE MISSILE PROPELLANT ...........................................................................................217
CHAPTER 11: ADVANCED FABRICS ............................................................................................................................227
CHAPTER 12: TELECOMMUNICATIONS .........................................................................................................249
END-ITEMS
CHAPTER 13: NIGHT VISION DEVICES ..........................................................................................................273
CHAPTER 14: MACHINE TOOLS ....................................................................................................................289
CHAPTER 15: BIOLOGICAL WEAPONS DEFENSE ..........................................................................................307
CHAPTER 16: CONCLUSION ..........................................................................................................................319
ANNEXES
EXPERTS CONSULTED ..................................................................................................................................327
ACRONYMS AND ABBREVIATIONS ...............................................................................................................329
GLOSSARY ....................................................................................................................................................331
LEGISLATIVE FRAMEWORKS ........................................................................................................................335
N AT I O N A L S E C U R I T Y
R E Q U I R E S A S T R O N G E R
U.S. MANUFACT URING S ECTO R
The United States’ national security is threatened by our military’s
growing and dangerous reliance on foreign nations for the raw materi-
als, parts, and finished products needed to defend the American peo-
ple. The health of our manufacturing sector is inextricably intertwined
with our national security, and it is vital that we strengthen the sector.
This report—prepared by Guardian Six Consulting LLC for the Alliance
for American Manufacturing—recommends 10 actions to make
America less dependent on foreign nations for the vital products that
enable America’s soldiers, sailors, airmen, and Marines to be the most
powerful and effective fighting force in the world.
The recommendations (detailed below) call for a joint strategy by gov-
ernment, industry, academic research institutions, and the military to
increase U.S. domestic production of manufactured items and recov-
ery of natural resources that the armed forces require. In addition, the
recommendations emphasize the importance of investment today in
the technological innovation, education, and training needed to keep
America secure tomorrow.
This report also calls for properly enforcing existing and interna-
tionally accepted laws that give U.S. defense manufacturers certain
preferences over foreign competitors. This enforcement will ensure a
level playing field, high-quality materials and products, and a healthy
U.S. defense industrial base. The report further recommends federal
investment in America’s high-technology manufacturing infrastructure,
especially in advanced research and manufacturing capabilities.
Another recommendation calls for increasing U.S. production of cer-
tain key raw materials needed for the nation’s defense to supplement
our imports. The recommendation also proposes stockpiling these raw
materials to ensure an adequate supply.

EXECUTIVE SUMMARY i
DANGERS With the closing of factories across the United States and the mass
exodus of U.S. manufacturing jobs to China and other nations over the
past 30 years, the United States’ critically important defense indus-
OF MILITARY
trial base has deteriorated dramatically. As a result, the United States
now relies heavily on imports to keep our armed forces equipped
DEPENDENCY
and ready. Compounding this rising reliance on foreign suppliers,
the United States also depends increasingly on foreign financing
arrangements.
In addition, the United States is not mining enough of the critical
metals and other raw materials needed to produce important weapons
systems and military supplies. These products include the night-vision
devices (made with a rare earth element) that enabled Navy SEALs to
hunt down Osama bin Laden.
Consequently, the health of the United States’ defense industrial
base—and our national security—is in jeopardy. We are vulnerable to
major disruptions in foreign supplies that could make it impossible
for U.S. warriors, warships, tanks, aircraft, and missiles to operate
effectively. Such supply disruptions could be caused by many factors,
including:
■ Poor manufacturing practices in offshore factories that produce
problem-plagued products. Shoddy manufacturing could be inad-
vertent, could be part of a deliberate attempt to cut costs and boost
profits, or could be intentionally designed to damage U.S. capabili-
ties. Motivated by expected gains in cost, innovation, and efficiency,
the Department of Defense (DoD) began a decided shift from parts
made to military specifications (Mil-Spec) to commercial-off-the-
shelf (COTS) parts and equipment two decades ago. However,
COTS parts often lack the quality control and traceability neces-
sary to ensure that parts used in the defense supply chain meet
the rigorous standards we expect of equipment vital to our national
security. Faulty and counterfeit COTS parts are already taking a toll
on readiness in several defense sectors.
■ Natural disasters, domestic unrest, or changes in government that
could cut or halt production and exports at foreign factories and
mines.
■ Foreign producers that sharply raise prices or reduce or stop sales
to the United States. These changes could be caused by political
or military disputes with the United States, by the desire of foreign
nations to sell to other countries, by the need to attract foreign
investment and production, or by foreign nations wanting to keep
more of the raw materials, parts, and finished goods they produce
for their own use.
ii REMAKING AMERICAN SECURITY
VITAL AND VULNERABLE
THE U.S. DEFENSE INDUSTRIAL BASE
VITAL TO OUR NATIONAL SECURITY SUPPLY CHAIN COMPLEXITY
The U.S. workforce provides the tools for ready warfighters
DEPARTMENT OF DEFENSE
LACKS VISIBILITY OF DEFENSE
PROCUREMENT
+ +
DEFENSE SUPPLY CHAIN
LOWER TIER SUPPLIERS
PRIME
U.S. WORKERS U.S. MANUFACTURING READY WARFIGHTERS CONTRACTOR
CREATING GREATER
SUBCONTRACTOR SUBCONTRACTOR SUBCONTRACTOR
U.S. NATIONAL
SECURITY
SUBCONTRACTORS SUBCONTRACTORS SUBCONTRACTORS
? ? ?
IMPORT DEPENDENCE
RESEARCH TODAY
The United States currently relies heavily on the foreign supply
of imports to manufacture many essential military systems CAPABILITIES TOMORROW
Investment in research, coupled with advanced domestic
manufacturing, will directly contribute to future warfighter success
+ =
RESEARCH ADVANCED FUTURE
SUPPLY CHAIN VULNERABILITIES AND DOMESTIC WARFIGHTER
DEVELOPMENT MANUFACTURING SUCCESS
The defense industrial base faces multiple supply chain vulnerabilities
SUPPORTING DEFENSE
American manufacturing supports critical U.S. defense needs
FOREIGN LOSS OF LACK OF LOSS OF
EXPLOITATION INNOVATION RAW MATERIALS DOMESTIC CAPACITY FACILITIES CAPITAL EXPERTISE
EXECUTIVE SUMMARY iii
RECOMMENDATIONS This report’s 10 recommendations to make the United
States less dependent on the importation of products
essential to our national security are based on the prem-
ise that the U.S. defense industrial base is a vital national
asset that is no less critical to our national security than
our men and women in uniform. The recommendations
call for:
➊
Increasing long-term federal investment in
high-technology industries, particularly those
involving advanced research and manufactur-
ing capabilities. The distinguishing attribute of
the U.S. defense industrial base is technological
innovation. As foreign nations continue manufac-
turing an ever-larger share of America’s defense
supplies, the United States increases its risk of
diminishing its capacity to design and commer-
cialize emerging defense technologies. To help
ensure that our armed forces dominate the future
battlefield, Congress should provide funding for
American manufacturers to develop and imple-
ment advanced process technologies.
➋
Properly applying and enforcing existing laws and
regulations to support the U.S. defense indus-
trial base. Domestic source preferences already
enacted into law, such as those that apply to the
steel and titanium industries under the Specialty
Metals Clause, must be retained to ensure that
important defense capabilities remain secure and
available for the U.S. armed forces.
iv REMAKING AMERICAN SECURITY